Fine Gael has called on the Minister for Finance, Mr Cowen, to rescind a law introduced last month which limits the time period for which PAYE workers can seek tax rebates if they paid too much tax in the past.
Under the law, workers who believe they may be owed tax can only make claims for the previous four years, whereas there used to be no limit.
Following the disclosure of figures which showed that PAYE workers were still owed at least €170 million for the period 2001 to 2003 in tax overpayments, Fine Gael criticised the Revenue Commissioners and Government for failing to introduce automatic review systems to help identify overpayments.
This is being done on a limited basis from later this year.
The party claimed that numerous entitlements remained unclaimed because taxpayers were unaware of their entitlements.
Under the current legislation, the Revenue Commissioners can only review a tax file following a request for a balancing statement.
Figures provided to the Fine Gael spokesman on trade and enterprise, Mr Phil Hogan, showed that the Revenue Commissioners estimate that taxpayers made overpayments of €306 million in 2003, €185 million of which has already been claimed back by 287,259 taxpayers.
It showed that 75 per cent who made requests received a rebate, amounting to an average of €140 each.
The €306 million estimate of overpayments is based on the average number of requests for balancing statements, usually amounting to a quarter of all taxpayers.
Last night, Fine Gael said it believed the number of people who could be entitled to rebates was much higher, citing examples such as bin charges, apartment services charges and other expenses that attracted reliefs. It claimed the amounts involved could be as high as €1.3 billion a year.
Yesterday, Mr Hogan accused the Revenue Commissioners of failing to protect the interests of taxpayers.
"What is particularly serious about this discovery is that it is likely to have had the greatest impact on PAYE taxpayers who did not have the wherewithal to get professional tax advice."
A spokesman for the Revenue Commissioners yesterday rejected the €1.3 billion figure mentioned by Fine Gael as incorrect.
He said that the 75 per cent rate was due to the fact that those who requested balancing statements "are people who have a fairly good idea they have made an overpayment".
He rejected criticisms that Revenue was not doing enough to identify overpayments, saying that tax officials would not be aware of the detailed personal information, such as medical expenses or waste charges, needed to make repayments.
In relation to the four-year rule, the spokesman said this was introduced after the law was changed to require the Revenue Commissioners to pay interest on overpayments.
He said the four-year rule also prevented the Revenue Commissioners from claiming underpayments after four years except in the case of tax evasion or fraud.